Reeling under the liquidity pressure, the mutual fund industry could see more bailout deals -- similar to the takeover of Lotus India Asset Management -- in the coming days, say industry experts.
"One or two more such kind of transactions may be seen in days ahead but that will mainly be for bailing out some problem-ridden fund houses," MF tracking firm Value Research CEO Dhirendra Kumar said.
Last week integrated financial services group Religare Enterprises announced acquiring Lotus India Asset Management, with an asset size of about Rs 5,000 crore.
According to industry sources, the Indian asset management arm of the crisis-ridden American International Group, AIG Global Investment Group Mutual Fund, which saw a fall of over Rs 1,000 crore in assets in October, is up for sale.
Besides, some more foreign fund houses are also expected to wind up their business in the near future because of losses on account of sharp meltdown of capital markets with benchmark BSE Sensex index plunging below 10,000 points from over 21,000 in January.
Religare Enterprises agreed to acquire Lotus Indian AMC from its majority shareholders, Alexandra Fund Management (an affiliate of Fullerton Fund Management Company, promoted by DBS of Singapore) and Sabre Capital.
Value Research chief Kumar said, "The outlook for the mutual funds industry remains grim for the next two years and fixed income plans would come under pressure. The days ahead will also see mutual funds reinventing themselves to be more focussed on retail investors."
According to Taurus Mutual Fund Director R K Gupta, some consolidation can happen in the coming days in the MF industry.
It is a good sign for the sector as the competition had intensified with so many new players coming into the fray, Gupta said, adding, consolidation is an ongoing exercise for any industry and enhances the growth in the industry.
However, Sahara Mutual Fund CEO N K Garg said the size of fund house has nothing to do with merger deals. Smaller MF houses, which have managed their liquidity and risk portfolios well, are doing quite good in these times as well.
Mutual fund industry has been under pressure for last two quarters and both the Reserve Bank and the Finance Ministry are ceased of the liquidity problem faced by the industry.
In order to provide liquidity to the cash-starved industry RBI last month opened a special repo window for the banks aggregating Rs 20,000 crore for on-lending to the industry.
The lackluster response from banks to pick up funds from this window forced the RBI to extend the window the limit is exhausted.
Meanwhile, mutual fund industry witnessed a 18 per cent decline in its assets under management, which plunged below the Rs 5 trillion mark in October for the first time this year.
The combined average assets under management (AUM) of the 35 fund houses in the country saw an erosion of over Rs 97,000 crore and dropped to Rs 4,31,901.42 crore at the end of October.
At the end of September, the average AUM had been Rs 5,29,102.92 crore, according to the data released by the Association of Mutual Funds in India.
"One or two more such kind of transactions may be seen in days ahead but that will mainly be for bailing out some problem-ridden fund houses," MF tracking firm Value Research CEO Dhirendra Kumar said.
Last week integrated financial services group Religare Enterprises announced acquiring Lotus India Asset Management, with an asset size of about Rs 5,000 crore.
According to industry sources, the Indian asset management arm of the crisis-ridden American International Group, AIG Global Investment Group Mutual Fund, which saw a fall of over Rs 1,000 crore in assets in October, is up for sale.
Besides, some more foreign fund houses are also expected to wind up their business in the near future because of losses on account of sharp meltdown of capital markets with benchmark BSE Sensex index plunging below 10,000 points from over 21,000 in January.
Religare Enterprises agreed to acquire Lotus Indian AMC from its majority shareholders, Alexandra Fund Management (an affiliate of Fullerton Fund Management Company, promoted by DBS of Singapore) and Sabre Capital.
Value Research chief Kumar said, "The outlook for the mutual funds industry remains grim for the next two years and fixed income plans would come under pressure. The days ahead will also see mutual funds reinventing themselves to be more focussed on retail investors."
According to Taurus Mutual Fund Director R K Gupta, some consolidation can happen in the coming days in the MF industry.
It is a good sign for the sector as the competition had intensified with so many new players coming into the fray, Gupta said, adding, consolidation is an ongoing exercise for any industry and enhances the growth in the industry.
However, Sahara Mutual Fund CEO N K Garg said the size of fund house has nothing to do with merger deals. Smaller MF houses, which have managed their liquidity and risk portfolios well, are doing quite good in these times as well.
Mutual fund industry has been under pressure for last two quarters and both the Reserve Bank and the Finance Ministry are ceased of the liquidity problem faced by the industry.
In order to provide liquidity to the cash-starved industry RBI last month opened a special repo window for the banks aggregating Rs 20,000 crore for on-lending to the industry.
The lackluster response from banks to pick up funds from this window forced the RBI to extend the window the limit is exhausted.
Meanwhile, mutual fund industry witnessed a 18 per cent decline in its assets under management, which plunged below the Rs 5 trillion mark in October for the first time this year.
The combined average assets under management (AUM) of the 35 fund houses in the country saw an erosion of over Rs 97,000 crore and dropped to Rs 4,31,901.42 crore at the end of October.
At the end of September, the average AUM had been Rs 5,29,102.92 crore, according to the data released by the Association of Mutual Funds in India.
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